The trusts in this section are not counted as resources in determining an individual’s eligibility for MA. The procedures in Section 441.4 Trusts Which Are Counted, do not apply to the trusts in this section.
NOTE: The CAO must forward a complete copy of the excluded trust to the Office of General Counsel for review. The Office of General Counsel will notify the CAO of its decision regarding the exclusion of the trust as an available resource to the individual
Special Needs Trusts (SNT) were established by the Federal Government in the Omnibus Budget Reconciliation Act of 1993 (OBRA 93) The purpose of an SNT is to permit a disabled individual to retain all of his or her assets and still qualify for MA.
A SNT is a trust containing the assets of an individual under age 65 who is disabled.
A SNT must be established by the individual’s parent, grandparent, legal guardian of the individual, or a court. Effective December 13, 2016, individuals can establish SNTs for their own benefit. If an individual establishes a trust for their own benefit prior to December 13, 2016, it cannot be considered a SNT.
The SNT must have a provision that distributions from the SNT be made for the sole benefit of the individual who is disabled.
The SNT must contain a provision stating that, upon the death of the individual, the Commonwealth will be paid all amounts remaining in the trust, up to an amount equal to the total amount of MA LTC benefits paid on behalf of the individual.
The individual or the individual’s legal representative must report the existence of the SNT, as well as the funding of the SNT, the CAO.
62 P.S. § 1414 55 Pa. Code §178.7(f) (1)
When a SNT is established for an individual who is disabled and under age 65, the CAO will continue to exclude the SNT even after the individual turns age 65. However, no additions may be made to the SNT after the individual turns age 65. If the individual places assets in the SNT after the individual turns age 65, that transfer must be considered a transfer for less than fair market value.
EXCEPTION: If the SNT was funded with proceeds from a structured settlement (such as the proceeds from the settlement of a personal injury lawsuit) prior to the individual turning age 65, the structured settlement proceeds going into the SNT after the individual attains age 65 are not considered transfers for less than fair market value.
To qualify for this exclusion, the individual must meet the MA SSI-related disability criteria. When the individual receives either Title II or SSI disability benefits, the CAO will accept the disability determination made for those benefits.
The Office of General Counsel must approve the Special Needs Trust. The OGC will issue a letter stating the SNT was reviewed and approved. The individual or trustee may have a copy of the signed letter from OGC approving the SNT. If the individual does not have an approval letter, the CAO should submit the SNT to Office of General Counsel for approval.
Transfers to an approved SNT are exempt from fair market value considerations. If the OGC determines a trust does not qualify as an approved SNT, any transfer into the SNT must be treated as a transfer for less than fair market value.
55 Pa. Code §178.104(e) (2) (iv)
NOTE: A Medicare Set Aside (MSA) arrangement is not a trust that is excluded in determining an individual's eligibility for MA. However, if the MSA is part of an approved SNT, the MSA should not be considered an available resource to the individual.
A pooled trust is a trust which contains the assets of an individual who is disabled. The trust must meet the following conditions:
Be established and managed by a non-profit association.
A separate account must be maintained for each beneficiary’s assets; however, for purposes of investment and management of funds, the trust pools the funds of each separate account into one individual account.
The separate account must be maintained by the individual, the individual’s parent, grandparent, legal guardian, or a court. Disbursements from the trust must be for the sole benefit of the individual.
The trust must contain a provision specifying that, if amounts remaining in the individual's account upon the individual's death are not retained by the trust, the trust will pay to the Commonwealth the amount remaining in the account up to an amount equal to the total amount of MA paid on behalf of the individual.
To qualify for this exclusion, the individual must meet the MA SSI-related disability criteria. When the individual receives either Title II or SSI disability benefits, the CAO will accept the disability determination made for those benefits. If the individual is not receiving those benefits, the CAO will make the necessary referral for a disability determination.
NOTE: For an individual over the age of 65, transfers into a pooled trust account must be treated as transfers for less than fair market value.
Updated October 12, 2017; Replacing July 11, 2014